The group says it found several methods by which they say dealers regularly add hundreds of dollars to vehicles' purchase price.
"The scams are not restricted to a few areas or dealerships," said Public Citizen president Joan Claybrook. "Customers are being cheated on both coasts and everywhere in between."
Alleged frauds include charging for extra features that may already come with the vehicle, strong-arming customers to agree to buy extras without specifying the additional cost and adding extras to purchase contracts after customers have left the dealership, working with finance suppliers to fix higher interest rates without the buyer's knowledge, and using credit reports to gain an edge in price negotiations.
Some of Public Citizen's claims were based on testimony from a former employee of Sonic Automotive in Florida. At a Washington news conference on 8 December, Overholt estimated he had personally overcharged customers $33 million over the course of his career.
He said: "When you start as a sales rep, you don't usually know what's going on. You suspect and gradually catch on, but you don't say anything out of fear of losing your job. As you move up into management, you learn about the scams. If you don't rip off customers, you'll lose your job."
Public Citizen is asking state attorney generals to step up enforcement of consumer protection laws.
NADA said the practices described in the report were not reflective of the industry as a whole, while Marianne McInerney, president of the American International Automobile Dealers Association, said the report contradicted four independent evaluations of customer satisfaction with dealers over the last two years by Gallup, Wirthlin, Ernst & Young and Consumer Reports.